The Student Loan Ranger

Yesterday was an absolute chop-fest.  Really dull and indecisive day for the first time in a while.  Pre-market the futures are up 2 points at 1028.75.  I’m not really planning on any trades until the following range in SPY has been breached to either side of $102.50-$104.  Statistically, yesterday was really weak and was comparable with August 20th in terms of my stats spreadsheet.  I have noticed a bit of a pattern at the moment, highlighted by the following diagram:

Set to rip today?

Leading days of the 19th and 25th have similar stats; Adv/Dec, ratio, average percentage of DV total, similar R values, similar Up >AR matrix values.  The Av% sector values were slightly stronger on the 25th.

The 20th and 25th shares similar statistics, however the main difference is that the market was up about a percent on the 20th, while barely staying afloat yesterday.  Again the ratios and matrices are similar here.  Elsewhere, look at how weak the materials have been relative to everything else lately, one day of top 2 performance.

The 21st was a strong day all round and has been the best performing day since I started keeping these stats.  If all the stats in the leading days are similar, then technically today should be pretty bullish.  HOWEVER, like I keep saying; in this market, what ever you think is going to happen – take the opposite side.  Therefore I am bearish leading into today but will not be surprised with a bull rally.  The short term range breakout in the SPY should point to where we are heading.

Elsewhere, I am going to have a bit of a cull on the overall watchlist.  Every day I keep finding another 5-10 setups to add to my daily shortlist.  It’s really better for me to concentrate on a list of about 10 all up premium setups instead.  Exposure to tickers has been good for me, but I am looking firstly to narrow the list to about 150 before figuring out where I am best at making the trades.

Speaking of “more setups”, keep a note on AMAT at $14 resistance, LUV setting up nicely on the daily chart in a similar way to FE.  I am waiting for WAG to pullback to the $32 mark (although I think we’ve missed this one), ITW at $42 & EMR to start forming a bull flag.  See what I mean about too many setups to monitor?

Checking the past 10 days of relative strength, I have noticed that healthcare and utilities have performed the best.  If this is such a bullish rally, then why are defensive stocks outperforming financials etc?  In the shorter timeframe, materials have been hammered the last 3 sessions as consumer, industrial and financials begin to wane.

Up or Down?

It is interesting to overlay the stats spreadsheet colour system atop the 10 day relative strength.  Would be more useful if this were done for each specific sector instead.

Charts and intra-day stuff to follow once market open.  /ES now only up 0.25 points before opening in 20 minutes.

Update 09:48US

Futures down 4.5 points in somewhat predictable fashion.  SPY right at the bottom of the range here at 102.50 so expecting a bounce here (to coincide with time of day).

JBLU featuring my favourite short term trading pattern (ascending wedge):

Easy trading

Update 10:00 US

We have slipped out of the short term trading range in SPY and are looking very bearish across the board.  Market top as indicated by contrarianism.

Update 12:00 US

There is absolutely sweet F all volume in this bounce – again.

I’m really hacked off with trading right now.  Last 3 trades in the red, including yet ANOTHER tos limit order issue and a horrendous trade in RDS.  The market maker on this stock has been taking the mickey for the past 2 hours, I even recorded it with camtasia with intent to post on here.  It was just like FTSE stocks used to me.  He’d narrow the spread to a cent, get a few, then widen it up to 15 cents at points – as soon as someone filled at market he’d move it the other way and lock it back into 1 cent.  I shouldn’t blame anyone or anything for the errors and I take full responsibility for my trading, but something else has happened in the past few days in terms of motivation.  Lately it seems (RDS, RTN, ITUB, ERTS) that every time I get into a trade with a nice chart, it goes nuts and just chops around.

I was well pumped last week and enjoying the trading, but this week I just haven’t gotten into the swing of things, and spending day after day in front of a computer (11am-10pm UK time) grinding out tiny winners with a micro account just isn’t satisfying.  Particularly when you consider the amount of work I have to put into it.  Neither is the fact that 2.5 months after finishing a college course, I still cannot even get an interview because EVERY company around here has a recruitment freeze on at all levels.  All of this is having a seriously negative effect on my positivity, and trading is impossible when your not mentally in the game.

Anyway the markets are just ripping at lunchtime at the moment on the back of zero volume, and it’s almost impossible to trade when it acts like this.  Especially when the participation by the big movers is minimal and particularly when were are testing overhead right now.  I don’t have a clue where these markets are heading and nobody else does either.  But some people are just being straight up retarded with this action right now (ie sales data yesterday).

Anyway with the last 3 trades being negative, these have negated all the gains of my previous 5 successful trades.  The ITUB one is just an absolute killer.  I knew the bounce yesterday was total BS, but you can’t change your stop level – ever.  Anyway the stock went back down to Yesterdays lows on a weak double bottom.  About the only stock doing what it should at the moment is JBLU which itself if pretty much a junk stock.

My main issue is lack of capital.  I can only have 1 or 2 trades open at any one time (and also the 3 trade rule), and all too often I am simply picking the wrong trades.  If I could have 4-6 open at any one time, I would be absolutely owning this market right now and be much more capable of absorbing these small losses.

For this reason I’ve decided to stop actively trading until I work up to save the $25k required to day trade.  I estimate this will probably take 3-5 years so let’s hope there is still a market then.  I will try out ideas on the paper system at TOS just to keep the trading brain oiled, but until I have saved up $25k, this blog will be pretty sparse in reading material.

Happy trading.